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Consumer purchases drive your business. When you want to make a change and implement a new initiative, how can you predict what the consumers will do?

Purchase forecasting is necessary to predict what the consumers’ purchases will be and what your return on investment will be. When forecasting future purchases, accuracy is essential.

Purchase Forecasting – How To Predict Future Purchases

Predicting future sales can be used to impact market penetration, production capacities, etc. Many packaged goods manufacturers also use it to convince retailers to give more space to a new, or updated, product.

Purchase forecasting is needed for new product launches, media programs, product or merchandising upgrades, category or product reassessment, etc.

There are three levels of accuracy when it comes to purchase forecasting:

Level 1:
Purchase Intent – Consumer Opinion – Provides Directional Information

Level 2:
Actual Purchases – In-Store Experiment w/ Sales Data – Provides Projectable Information

Level 3:
Merge Purchase Intent and Actual Purchases – Provides the highest level of accuracy

Level 1 – Purchase Intent:

Consumer surveys can be used to forecast perceived future purchases.
Consumers try the product and answer several product specific questions regarding product enjoyment, usefulness, etc. They are also asked about their shopping habits in regards to the product, category, pricing, trial, purchase frequency, etc. These results are speculative and can be used as directional, not volumetric.

This method is a good first step but realistically cannot be used as a volume projector.

Level 2 – Actual Purchases:

The best predictor of future purchase volume is an In-Store Test.
An In-Store Test is an experiment where the product in question is introduced into a limited number of test stores and the sales are weighted against control stores and a base period. This methodology provides a real world experience where shoppers will actually decide whether or not to purchase the product. These actual purchases are then used to predict future purchases on a larger scale.

The in-store test methodology provides a unique opportunity to determine volumetrics such as;

• New item unit and dollar sales
• Impact on category performance
• New product share of category sales
• Cannibalization; where is sales volume sourced from, i.e., your brand, competitive brands, incremental to category, etc.

This procedure can also be used to determine the best price, space allocation, and location within the category that optimizes the product launch.

This method is the only way to predict actual sales volume in a way that can be projected out to an entire banner, region, etc.

Level 3 – Combining Purchase Intent and Actual Purchases:

By using real In-Store Testing, future volume projections are very accurate and will provide solid data.

Combining the In-Store Test with an In-Store Survey during the test can achieve both volumetric data and behavioral / intent information that reflects consumers’ thoughts and opinions on the product.

Combining the first two methods provides the most accurate Purchase Forecasting model. It incorporates volumetric data and consumer perceptions to provide a complete and robust solution.

The next time you and your team want to determine purchase intent, remember the three levels of Purchase Forecasting. Make sure you use the solution that is right for your situation and your product. Do that, and you can be confident in the information you gather and the decisions you base on that information.

Always working to improve your research experience,

Jennifer K. Mitrovich
Vice President - Key Accounts
Proforma Consulting Limited
(905) 858-5000 x225
jennifer@proforma1977.com

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